Making Tax Digital might sound like something that only matters to accountants. However, it affects how many landlords and self-employed people will soon report their tax.

HMRC introduced Making Tax Digital to move people away from annual reporting to a more regular schedule using digital records. 

If you earn income from property or work for yourself, this guide explains what Making Tax Digital means, who it applies to and when.

Summary: Making Tax Digital (MTD)

  • Making Tax Digital changes how self-employed workers and landlords report their income, not how much tax you pay.
  • Many landlords and self-employed people will need to start submitting quarterly digital records, based on income thresholds, staggered over time from April 2026 onwards, as thresholds are reduced in later years.
  • Penalties apply if your submissions are late.

What is Making Tax Digital?

Making Tax Digital, often shortened to MTD, means that instead of keeping paper records and submitting one tax return each year, you keep digital records and send updates to HMRC throughout the year. 

You submit these updates using approved software rather than HMRC’s older online forms. The aim is to reduce errors and give a clearer picture of income as it happens.

It does not mean HMRC is charging tax more often, but it does change how and when you report income information if you’re self-employed or a landlord earning a certain amount.

A common concern is whether Making Tax Digital replaces Self Assessment entirely. In practice, it changes the Self Assessment process rather than removing the requirement to make an annual declaration.

Annual declarations are still a thing, alongside quarterly updates.

Who does Making Tax Digital apply to?

Making Tax Digital does not apply to everyone at the same time. Landlords and self-employed individuals with qualifying income over a certain threshold fall within the scope first.

HMRC looks at total income from self-employment and property when deciding whether someone must comply.

Joint landlords need to pay attention here. Even if you only own part of a property, your share of the income still counts towards the threshold.

Some people are not required to join yet. That includes those with income below the threshold and individuals who qualify for exemptions.

At the time of writing, the thresholds are, as confirmed by government guidance:

  • £50,000 for the 2024 to 2025 tax year, with MTD required from 6 April 2026
  • £30,000 for the 2025 to 2026 tax year, with MTD required from 6 April 2027
  • £20,000 for the 2026 to 2027 tax year, with MTD required from 6 April 2028 – but the government may introduce legislation to lower this threshold in future

Because the rules can change over time, it is important to check where you stand rather than relying on assumptions.

Making Tax Digital: Landlords

Instead of waiting until the end of the tax year, landlords within the scope now submit quarterly updates showing income and costs for each period. These updates give HMRC an ongoing view of rental activity.

The process does not change how the government taxes your annual income from self-employment and property. It changes the timing and method of reporting.

Landlords often worry that quarterly updates will mean quarterly tax bills. That is not necessarily the case – payments can still follow the usual schedule, even though reporting happens more often.

For landlords with multiple properties, keeping organised digital records becomes especially important, as clear records make quarterly submissions far easier to manage.

Making Tax Digital deadlines

Instead of one annual submission, you send four quarterly updates during the tax year. Each update covers income and expenses for that period.

After the tax year ends, you submit an end-of-period statement to confirm the figures. A final declaration then replaces the traditional annual return.

These deadlines are separate from payment dates. Even though reporting happens quarterly, tax payments do not automatically move to a quarterly schedule.

Be aware that missing a deadline can still cause problems – for a broader picture of when taxes are due, read our article. It may help you avoid Self Assessment late payment penalties.

Making Tax Digital penalties

Penalties under Making Tax Digital follow a points-based system. Each late submission adds a point. 

Once you reach a certain number of points, a financial penalty applies. Points expire over time if you stay compliant.

Late payment penalties still exist as well. Submitting updates on time does not remove the need to pay tax when it falls due.

The system is designed to encourage consistent compliance rather than punish one-off mistakes. Still, repeated delays can become costly – for quarterly submissions, a £200 financial penalty applies once you reach 4 points.

The simplest way to avoid penalties altogether is to stay organised and submit on time.

How do I prepare for Making Tax Digital?

The government has provided a tool to help you work out which software to use. There are several options and the right choice depends on how complex your income is.

Keeping records digitally from the start of the tax year also helps. Trying to convert paper records later often creates unnecessary work.

Regular check-ins during the year can help to reduce pressure around deadlines. If your income comes from more than one source, professional advice can help keep everything aligned.

FAQs: Making Tax Digital

Is Making Tax Digital compulsory for landlords?

It is compulsory for landlords whose qualifying income exceeds HMRC’s threshold. Those below the threshold are not currently required to join.

Does Making Tax Digital mean I pay tax quarterly?

You submit quarterly updates, but tax payments still follow the usual timetable.

Do I still submit a tax return under Making Tax Digital?

You still have to make an annual declaration of your income, but through a ‘final declaration’ within MTD software rather than the old Self Assessment tax return form. The final declaration replaces the traditional Self Assessment tax return form, but it serves the same purpose.

What happens if I miss a Making Tax Digital deadline?

Missing deadlines can lead to penalty points. Repeated issues may result in financial penalties.

Do I need special software for Making Tax Digital?

You must make submissions using HMRC-approved software. Paper records alone are not enough.

Final thoughts

Take a look at our popular articles for further reading, including:

Making Tax Digital represents a shift in how you manage tax, not how much tax you pay.

For landlords and the self-employed, the most significant change is moving from annual reporting to regular updates. However, with the right setup, that change does not need to be disruptive.

If you want help preparing for Making Tax Digital or understanding how it affects your situation, Accountants East London can support you – please contact us.